WASHINGTON, Sept 27 (Reuters) - U.S. regulators punished two
more firms for excessive speculation in cotton markets during
one of the most tumultuous periods in the contract's history,
tagging JP Morgan and Australia and New Zealand Banking
Group Ltd Bank with fines totaling nearly $1 million.

In the latest sign that the U.S. Commodity Futures Trading
Commission is cracking down on trading limits in futures
markets, JP Morgan agreed to pay $600,000 for exceeding position
limits in the cotton market in September and October 2010, one
of the agency's largest civil penalties ever for position limits
violations.

Earlier in the day it said Australia and New Zealand Banking
Group Ltd would pay $350,000 for exceeding limits in
the CME Group's Chicago Board of Trade wheat futures
contract on multiple occasions in August 2010, and in
IntercontentalExchange cotton futures in February 2011.

"These breaches of CFTC regulations were inadvertent,
technical in nature and confined to a small number of
transactions. However, ensuring we are compliant with
regulations is a key priority in every part of ANZ," ANZ Chief
Risk Officer Nigel Williams said in a statement.

JPMorgan declined to comment.

Coupled with two previous settlements over the past week and
one in February, the CFTC has collected more than $2 million in
five civil fines related to position limits this year.

Prior to the summer of 2010, when the Dodd-Frank financial
reforms set in motion new rules that would expand federal
trading limits to all commodity markets, the CFTC had only
issued five fines since 1995, according to a Reuters review of
enforcement actions on the agency's website.

For a FACTBOX on past fines see:

The JPMorgan order is the latest in a flurry of position
limits settlements announced by the CFTC in the lead-up to the
Oct. 12 effective date for new caps on the number of contracts
that traders can hold in certain markets.

They are also the second and third penalties related to a
particularly volatile period in the cotton market, which
surged more than three-fold from August 2010 to March 2011 --
and then more than halved in five months.

On Tuesday, the CFTC said Sheenson Investments Ltd, a
little-known Shanghai, China-based firm, and its founder Weidong
Ge had agreed to return $1 million in ill-gotten gains and pay a
$500,000 civil penalty for exceeding federal limits on
speculative bets in soybean oil and cotton futures. For a story
see:

Cotton traders say some companies may have inadvertently
exceeded their limits during this period because of the
extraordinary volatility of the market, as well as the
difficulty of managing complex options positions.

But cotton is not the only market facing heightened
scrutiny.

Last Friday, the agency ordered Citigroup Inc and a
subsidiary to pay $525,000 for violating limits in the wheat
market.

The settlements come before a new set of trading curbs kicks
in Oct. 12. The rules, which aim to rein in speculation and
limit price spikes, were included in the 2010 Dodd-Frank
financial reform law and finalized by the agency last October.
Additional caps are expected to kick in next year.

Financial industry groups have sued to stop the new
position-limit rules from taking effect, saying they would
irreparably harm the marketplace and that the CFTC failed to
sufficiently weigh the economic consequences of the rule, as is
required by law.

Traders and some Republican lawmakers have argued there is
no evidence that speculators inflate prices.

A judge has not yet ruled in the case, which was filed by
the Securities Industry and Financial Markets Association and
the International Swaps and Derivatives Association in December.